It could have been a disaster: runs on banks, uncashed checks, confusion at the counter. But by all accounts, the European Union’s switchover from a rainbow of different currencies to a single currency, the euro, was so orderly it was downright dull.
“The boring thing about the euro is that everything is working so well,” a German retailer told the New York Times in late January 2002, a few weeks after 8.1 billion euro notes flooded the market.
The transition may have been quick and quiet. But the road to a common European currency was a bumpy ride from economic confusion to eventual unity. Here’s a brief history of the money that has come to define the hopes of the European Union.
A vision of peace led to the first economic union in Europe
It all began with the Treaty of Paris, a 1951 treaty negotiated in the aftermath of World War II. Officials at the time worried that hyperinflation and economic instability similar to that experienced by Germany after World War I might ensue. So European nations decided to band together not just to stabilize their economies, but minimize the chance of another devastating war.
In 1951, the treaty established the European Coal and Steel Community, which united steel and coal production in France, West Germany, Belgium, Luxembourg, and the Netherlands. Since France and Germany had long been enemies, it was thought that pooling the production of two materials essential to waging war would essentially make fighting one another impossible. It also created a common market for those commodities, kicking off the slow movement toward a common currency that would follow over the next half-century.
In 1957, the Treaty of Rome created the European Economic Community, a common market which gradually eliminated customs and other trade barriers between the six nations. In 1967, both groups merged with the European Atomic Energy Committee to form the Commission of the European Communities, which was joined by other European nations throughout the years.
Economic volatility made currency reform more important than ever
Europe was peaceful, and the currency of its various nations stable, for now. Common market countries grew more prosperous over the 1950s and early 1960. But the late 1960s threatened that newfound prosperity when international currency began to experience large swings in value.
The EEC created a working group to try to figure out if it was viable to unite economically and monetarily, and in 1970 the Werner Report, named after the group’s chair, Luxembourg’s prime minister Pierre Werner, recommended that Europe adopt a single currency within a decade. It was a plan designed to help the region achieve economic equilibrium, but as the world economic crisis deepened, it was largely abandoned as each country grappled for monetary stability.
It took decades for a plan to emerge
Europe wanted a single currency, but it took until 1989 for a serious plan to emerge again. The European Communities commissioned its president, Jacques Delors, to head a group that would figure out a plan for monetary unification. Its report proposed a clear road to a single currency, and in 1992, the Maastricht Treaty clearly defined what European unity would mean, and gave the European Union a new name.
Under the treaty, progress toward the currency meant three stages: introducing free movement of capital between member states, increasing cooperation between states and their central banks, and gradually introducing a single currency and monetary policy. The treaty also laid out how new member states could join the union and set criteria for using the currency, like having stable levels of public debt and inflation.
How the currency got its name
The legal framework for a common currency had been built. But the specifics of the currency itself still needed to be hashed out—including what to call it. “The name of the single currency must be the same in all the official languages of the European Union, taking into account the existence of different alphabets; it must be simple and symbolize Europe,” the European Council wrote in 1995.
Enter Germain Pirlot, a Belgian professor and esperantist who thought that the currency should reflect the people who would use it. He wrote to the commission’s president in 1995 suggesting the name “euro.” In 1995, it became the official name of the currency, and the European Council chose the symbol €. The symbol "was inspired by the Greek letter epsilon (Є), a reference to the cradle of European civilization,” the commission writes. “It also stands for the first letter of the word ‘Europe’ in the Latin alphabet, while the two parallel lines running through the symbol signify stability.”
With a name in place, the Euro countries set a date for its introduction in electronic form (for banking and electronic transmission): midnight on January 1, 1999. Starting then, each participating country began to phase out its currency, working against set deadlines.
A high-minded design—and an orderly rollout
On January 2, 2002, euro banknotes and coins began to circulate. Luc Luycx, a Belgian designer, won an international competition to design the common side of each coin. They feature maps of Europe, and each euro country contributes national sides that feature various figures and facets of their countries. The banknotes were designed by Robert Kalina of Austria and feature architectural features from different phases of European history. The gates, windows, bridges and archways on the notes don’t show actual buildings, but symbolize openness and cooperation. Starting in 2013, a refreshed series of banknotes has been sent into circulation. It features an updated map of Europe and better safety features.
The rollout was relatively smooth, despite the refusal of some countries, like the United Nations and Denmark, to use the currency and strikes by disgruntled bankers in both France and Italy. Meanwhile, reported CBS News, people exchanged hoards of money they had been hiding for years and bestowed piles of old money on churches as offerings to offload their old coins. The public had to be taught not just to recognize the new currency, but to determine whether the coins and banknotes were counterfeit and figure out what it was worth compared to their old currency.
“As soon as I switched to the single currency, I converted all my money into euros and tried to think only in that currency,” said Germain Pirlot, the professor who suggested the currency’s name, in 2007. He called the conversion “a simple gymnastics of the mind” and encouraged his fellow Belgians to think in euros, not francs, abandoning the complicated math that went into understanding how much the currency might be worth.
Will the euro survive?
The euro was supposed to usher in a new age of economic stability, but it has had its share of ups and downs. Beginning in 2009, the world began to realize that Greece, a eurozone member, might default on its debt. The prospect of one or multiple countries leaving the economic alliance unsettled the international markets, and the European Union was criticized for standardizing only its currency, not its financial systems. The EU bailed out multiple countries, but the future of the economic alliance is still an open question.
“Although they described the project in grand terms, Europeans set about creating an “incomplete monetary union,” one that had a common monetary policy but lacked the fiscal safeguards to dampen booms and recessions,” writes economist Ashoka Mody for Quartz. “Within this incomplete structure, conflicts involving the conduct of monetary and fiscal policy were bound to arise.”
With Brexit on the horizon, the future of the eurozone is still unclear. But the ubiquity of the euro is not. Today, nearly 1.2 trillion euro are in circulation, and the currency has been more valuable than the dollar for nearly two decades. Europe’s risky gamble on a common currency may still pay off. Until then, it pays for the practicalities and pleasures of 19 members of the EU—one ambitious coin, banknote, or wire transfer at a time.
